Rupiah may still rise on IBRA dollar-selling: Analyst

Rupiah may still rise on IBRA dollar-selling: Analyst

Berni K. Moestafa, The Jakarta Post, Jakarta

Dollar-selling by the Indonesian Bank Restructuring Agency
(IBRA), amid slowing corporate demand for the foreign unit, may
wedge the rupiah from its recent trading band this week to test
the 10,000 level again, said one currency analyst.

Director at PT Bank Buana Indonesia Pardi Kendy said demand
for the U.S. dollar remained high, but was likely to ease in the
coming days as firms deferred their dollar purchases to next
year.

At the same, IBRA's converting its dollar proceeds would give
the local unit the needed boost to ascend, he said.

"There has not been much dollar-buying likely, with that many
holidays until the year-end," Pardi told The Jakarta Post on
Monday.

IBRA, which should have secured some Rp 3 trillion (about
US$287 million) in asset sales last week, must convert its dollar
proceeds into rupiah before transferring them to the state
coffers.

The agency is earmarked to raise a total of Rp 27 trillion in
asset sales this year to help plug a deficit in the state budget.

Last week, dollar selling by IBRA helped the rupiah strengthen
to 10,020, but companies moved in to scoop the cheap dollar. At
Friday's close the local unit still ended lower at 10,425,
against 10,385 a week before.

Pardi added that Bank Indonesia would likely seize the
momentum to release dollar supplies onto the market.

But he ruled out the possibility of heavy interventions. Pardi
said Bank Indonesia would unlikely spend much for a stronger
rupiah.

In previous years, he said, Bank Indonesia was often seen
window-dressing the rupiah, pulling up the local unit to make it
look good at the turnaround of the new year.

"The government hasn't done any window-dressing over the past
two years, I don't think they'll do it this year," he said.

The market has begun to cool down over the past few days, as
was evident in the narrow band that has marked the rupiah's
trading pattern.

Last week's signing of the fourth letter of intent (LoI) to
the International Monetary Fund (IMF) did little to impress the
market.

The signing could pave the way for the disbursement of $360
million in IMF loans, but not before mid-January at the earliest.

Earlier this year, a mere remark by the IMF on Indonesia was
often sufficient to swing the rupiah sharply in either direction.

However, that effect has lessened, as last July a new
government took over and secured the IMF's support.

"We don't expect any nasty surprises in the short term, so
that should help the rupiah," Pardi added.

He said that, at best, the rupiah could test the 9,800 level,
but even then only for a short period before dollar hunters set
in to erase the gains.

Mirroring the rupiah's tight trading pattern, the Jakarta
Stock Exchange (JSX) Composite Index has been moving between 370
points and 380 points over the past few weeks.

The JSX index closed last week trading a notch lower at
374.69, as against 377.21 a week before.

Trading last week was cut short by a bourse holiday on Friday,
and again this week on Monday and Tuesday in observance of the
post-Ramadhan Idul Fitri holiday.